Tesla Software Updates Help Distinguish It From Other Carmakers

Cars typically lose value over time as features become outdated. Tesla Motors Inc., the Silicon Valley automaker, actually adds capabilities to its vehicles.

How? By sending software updates to customers of its all-electric Model S sedan, similar to how Apple Inc. upgrades its operating systems. On Thursday, Chief Executive Officer Elon Musk said Tesla would improve its system for trip planning and helping drivers avoid running out of power. In a few months, it will push out a version 7.0 of the car’s software including an overhaul to the user interface and computerized steering in specific circumstances, he said.

“This was yet another reminder of the increased software content going into light vehicles and of the need to be able to refresh the software through over-the-air updates,” Barclays Plc analyst Brian A. Johnson said Friday in a research note. Other automakers “have some work to do” before they can make similar improvements to parked cars while owners sleep.

Tesla, based in Palo Alto, California, is an unusual automaker already with its high-end cars and stated desire to lead a carbon-free revolution in personal transportation. But its ability to add functionality to cars is unique and should slow their depreciation.

Andrea James, an analyst at Dougherty & Co., said that when Tesla introduced a hardware update -- such as when it announced the dual-motor version of the Model S last fall -- some people who bought a two-wheel-drive Model S were annoyed. New software, on the other hand, automatically goes to everyone.

“When it’s a hardware update, people are bummed if they missed out,” James said Friday in an interview. “When it’s software, existing customers get to participate in the excitement. It has a cool factor.”

Tech Company

On Thursday, some investors may have been disappointed that the upgrades didn’t go further, and the shares fell 2.5 percent to $195.65. That was still 3.7 percent higher than before Musk tweeted on Sunday that a software upgrade would “end range anxiety,” the fear that an electric car will lose its charge and leave drivers stranded.

Using the car’s computer to help drivers stay fueled up is really a pretty basic concept, said Karl Brauer, an analyst with Kelley Blue Book.

“Incorporating charging locations into a vehicle’s navigation system and trip planning is an excellent feature, but it’s also not new or innovative,” he said in an e-mailed statement. “The Nissan Leaf offered this feature when it was introduced back in 2010, and nearly every electric car offers it today.”

California Carmaker

Regularly augmenting its cars’ capabilities is part of Tesla’s culture as more of a tech company than an industrial one, Musk said Thursday.

“A huge part of what Tesla is is a Silicon Valley software company,” he said. “People take it to be normal that your phone and laptop will keep improving, and that is the approach we’ve taken with the Model S. It is a fundamental paradigm shift from the way cars have been done in the past, where they are quite static and software really got a distant back seat.”

Traditional automakers occasionally update software using compact discs or thumbdrives, typically to improve maps or fix problems with how its systems operate.

The updates are expected to help sales in China, where Tesla has struggled to overcome the perception that charging is difficult.

“Range anxiety is a significant factor in China,” said Musk. “We’ve added more superchargers in China than anywhere else in the world. I’m fairly optimistic about China in the long term. It’s on the upswing.”

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